By Bloom Energy stock has slumped sharply in the past few months, erasing some of the gains it made earlier this year, when it jumped to a record high. It dropped to $218, its lowest level since September 3. Traders are now expecting volatility as it publishes its financial results later this week.
Options market predicts high volatility after earnings
Traders in the options market are predicting that Bloom Energy stock will experience high volatility this week. Barchart data shows that the company has an implied volatility of 131%, much higher than the historical volatility of 83%.
A closer look at the options chain shows that it has a put/call volume ratio of 0.51, a sign that there are more calls than puts. However, the put/call open interest ratio is 1.01, a sign that there are more puts than calls in this case.
Most of the calls are concentrated at $250, up by 14% from the current level. On the other hand, most of the puts are concentrated at $220.
These numbers coincide with what happened in the last financial results. Its stock dropped by 14% after releasing its earnings report in July. Before that, it jumped by over 20% after releasing its Q1 results.
Earnings to provide color on its growth
The upcoming earnings report will be important because it will provide more hints on its business as the artificial intelligence (AI) boom continues. Most notably, the company will provide information about Project Jupiter, which is being built by Oracle.
Oracle recently announced a force majeure on the project as it faces some major challenges. One of the challenges is on the natural gas that will power it. Oracle has selected Bloom to be the service provider in a deal that will be worth millions of dollars over time.
The company will also provide hints on its order book. Its last earnings report showed that its revenue jumped by 165.5% to $1.065 billion, with its gross margin hitting 33.4%. Its operating margin jumped to $182.2 million. Most notably, the company announced that its business had become the standard for AI on-site power.
Bloom Energy’s earnings are expected to show that its revenue rose by 106% in the third quarter to $1.07 billion. For the year, the management is expected to hit $4.12 billion, up by 103% from a year earlier.
Bloom Energy stock technical analysis
BE stock chart | Source: TradingView
The daily chart shows that BE stock has slumped from a high of $300 in September to the current $225. This retreat started after it formed a crucial resistance level of $300, its highest level in September.
It has dropped below the Major S/R pivot point of the Murrey Math Lines tool. On the positive side, the stock has moved to the 200-day Exponential Moving Average (EMA).
Therefore, there is a likelihood that the stock will rebound, potentially to the psychological level of $250. A move above that level will point to more gains towards $300. On the other hand, a drop below the support level of $200 will invalidate the bullish outlook.
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